Why is leasing a new 4runner bad? Is buying and financing better?

[61hawk]

The interest rates are going to rise in the near future. The Prime Rate is set by the FED Reserve Board and they are about to raise the rates. Best guess is the Prime Rate will go up in September or December. Shortly after that happens real estate mortgage rates and car loan rates will go up too.

Yeah... I seriously doubt that 0.25% to 0.50% interest rate increase is really going to affect anyone's decision to buy a vehicle or house.

 

[blackpearl2007]

So I leased my first car after college some 18 years ago - a Camry. I hated being in a lease as I felt restricted every time I got in the car to drive it. I was afraid of the mileage limit and sure enough I was also hit by a car at night who didn't have their headlights on. Needless to say when I traded that car in I took a big hit. I was over on mileage even when I tried my best to keep it under. While I financed my next car, due to the lease, I was upside down. Eventually paid that car off and righted myself financially. I have never leased a car again - not because of the accident but I can't get over the mileage constraint. We purchased a limited 4x4 4Runner last month and were prepared to pay in cash but decided to finance through our credit union. The cost of money is cheap right now and decided to keep our cash. We will pay it off in the next two years or so but felt we could do more with the cash versus having the title at this point.

 

[blackpearl2007]

Of course you could hold off a few more years for a new 6th gen. I hear it will come standard with a V8, full time 4wd, 6 speed manual and a flux capacitor

Where did you hear this? Not to derail the thread but would be surprised if that happens. I would love for that to happen but not too hopeful.

 

[alext72888]

If the OP would supply some "buy" and "lease" numbers, I would crunch the numbers just for fun to see how bad of deal it is.

I'm going around dealer to dealer and collecting quotes and numbers, exchanging emails, and establishing a good communications via email for negotiations. From everything I have gathered, I think it makes more sense to buy.

Toyota offers 60 months 2.9% financing, but some credit unions offer the same percentage but for 72 months. Sure I could wait and save up more for a down payment, but then the 2016 models will be 1-2k more expensive anyways and I won't win anything in the long run.

My plan is to pose the dealers against one another in terms of how low they will go with the price, and simply take the best number on the last day of the month.

So far I can't find a non premium trail that has KDSS (don't think they make them, dealer couldn't even configure one for me) from what I have gathered, I think KDSS is valuable since it greatly improves road performance during bumps and turns.

I talked with my dad and he says to go for the leather seats anyways since I'll be keeping this car for a long time, they are likely to last longer and look better than the cloth seats? (don't know if that's true)

So far, for a black trail premium with KDSS, I'm getting offers at between 38-39k (I haven't negotiated down yet)

as for the regular trail with non kdss, I got an offer today just over 33k which is the lowest i've seen ever (dealer says it's invoice cost, and trucar checks out that it actually is)

I Hope I can negotiate down to at or just over 37k for the trail premium.

 

[Lester Lugnut]

Leasing a car is a huge waste of money. You might as well just drive down the road throwing money out the window.

For the most part, I am inclined to agree with this statement except for situations noted in others posts here.

Im also a firm believer that if you have to finance it, you cant really afford it.

If this were true, not many would own a car or home.

Ive paid cash for every car Ive owned and I can tell you for a fact when you pull out a pile of cash the sellers knees go weak and you can practically steal the vehicle from them, especially at auctions. This holds true for pretty much anything thats for sale.

I've paid cash too, but back when interest rates were double digit. Dealers do not go weak when you pull out cash. I never saw one smile when I pulled out my check book. Waving cash helps when buying a lawn mower from a mon-n-pop lawn and garden; not when buying a car.

 

[MLA]

Where did you hear this? Not to derail the thread but would be surprised if that happens. I would love for that to happen but not too hopeful.

I'm just being a smartass (hence the flux capacitor comment)

 

[pplmvr33]

Leasing a car is a huge waste of money. You might as well just drive down the road throwing money out the window. Im also a firm believer that if you have to finance it, you cant really afford it. Save up for the car you want, pay cash, get a better deal, own the vehicle out-right.

Ive paid cash for every car Ive owned and I can tell you for a fact when you pull out a pile of cash the sellers knees go weak and you can practically steal the vehicle from them, especially at auctions. This holds true for pretty much anything thats for sale.

By paying cash you are throwing money away. No way would I take 40 grand out of my high yield accounts that average 10% or more. Much more cost effective to keep the money in my bank and pay the 1.9% apr on the car note over time.

 

[DesertCanyons]

... From everything I have gathered, I think it makes more sense to buy. ...

So far I can't find a non premium trail that has KDSS (don't think they make them, dealer couldn't even configure one for me) from what I have gathered, I think KDSS is valuable since it greatly improves road performance during bumps and turns.

I talked with my dad and he says to go for the leather seats anyways since I'll be keeping this car for a long time, they are likely to last longer and look better than the cloth seats? (don't know if that's true)

So far, for a black trail premium with KDSS, I'm getting offers at between 38-39k (I haven't negotiated down yet)

as for the regular trail with non kdss, I got an offer today just over 33k which is the lowest i've seen ever (dealer says it's invoice cost, and trucar checks out that it actually is)

I Hope I can negotiate down to at or just over 37k for the trail premium.

Congratulations on your decision to buy. Yes, Toyota does make the regular Trail Edition with KDSS. Here in the southwest most Trail Editions come with KDSS. That's what I ordered, See my sig' below. I wanted a 4Runner without all the added accessories, like the sliding cargo tray, so I had to order one. The only option I couldn't eliminate was the NAV. They just don't have the Entune without NAV any more for this year. It may be too late in the year to order a 2015. I don't know. The wait for an order from Japan is 8 to 12 weeks. Two or three weeks of that is shipment from the factory. If you can find what you want anywhere locally then consider travelling to get it or ask your dealer to get it for you.

The deal you quoted for $33k is a great deal. Check to see if it is a dealers demo or slightly used with miles on the odometer. If it's been driven then the deal is not as good as it sounds. I wouldn't know what it's worth for a dealer demo. If you can close that deal and it's a new T4R, go for it. I'm going to pay $35,445 plus Tax and Title, which is the lowest price I could find using a Costco discount.

The premium comes with a sunroof and the "SofTex" leather-like upholstery. It's not leather. Most of them come with a lot of accessories that drive the price up. I don't want a sunroof so I didn't want to pay for the Premium, but you might.

 

[tH1e swiN1e]

Why must you drive the nicest, newest, shiniest thing? Id drive a POS beater I paid cash for before Id ever go get a car loan. When you finance something the bank owns it not you.

Yes cash for everything, including houses and properties. If I must get a loan it would need to be small and paid back in a short time period, and I'd have to put over 60% as a down payment. The reason everyone isnt doing it is because its hard and takes work, planning and sacrifice and they all want immediate satisfaction with buying it now, not waiting and saving. I dont want to be a slave to a bank.

Someone said something about taking money out of a high yield account??? Im not even going to respond because the thought alone is ridiculous.

 

[Bevo]

Why must you drive the nicest, newest, shiniest thing? Id drive a POS beater I paid cash for before Id ever go get a car loan. When you finance something the bank owns it not you.

Yes cash for everything, including houses and properties. If I must get a loan it would need to be small and paid back in a short time period, and I'd have to put over 60% as a down payment. The reason everyone isnt doing it is because its hard and takes work, planning and sacrifice and they all want immediate satisfaction with buying it now, not waiting and saving. I dont want to be a slave to a bank.

Someone said something about taking money out of a high yield account??? Im not even going to respond because the thought alone is ridiculous.

----

 

[pplmvr33]

Someone said something about taking money out of a high yield account??? Im not even going to respond because the thought alone is ridiculous.

You must not know much about investing... Any financial planner worth a dime would never let you liquidate $40,000 to dump on a new car that depreciates the second you drive it off the lot. That money is much better left in an account that works for you. The small hit you would take on a low interest car note is negligible. Unless you have crappy credit or live paycheck to paycheck then I guess saving to pay cash for a beater would make more sense.

 

[Jernik]

To the OP: sounds like you found your answer, but to add my experience with leasing.

Back in the mid 90's, leasing was better because the banks hadn't figured out how much of a bath they were going to take on their high residual values. I think they either 1) planned for it to get people used to leasing, or 2) overestimated what a returned low mileage lease would bring in the used market. Either way, they have learned their lesson, and lease residual values have been adjusted accordingly.

We've bought out one vehicle we leased, and while I don't have the exact numbers, I will say it cost us more in the long run. Plus, around year 5 you're definitely finished making payments. You just want it to be over by that time. With the lease, you're practically just starting the financing piece of the buyout at year 5.

Leases do have a place though. Our most recent lease is a hardtop convertible. Why lease? Because it is our first convertible, and I wasn't sure how well the wife would like it (turns out she LOVES it) and we weren't sure how much of a problem the top might be (it has had zero issues so far). We leased due to this uncertainty, and the guarantee we could get out if it after a set period of time if we didn't like it or it became a headache to keep/maintain.

Since you sound like the plan is to keep it long term, find the lowest interest loan you can, try to keep it under 72 months (the shorter that will fit your budget the better, IMO) and just buy it. You do the paperwork once, you do the titling once, and when it's paid they send you the title and all is done. The repurchase of a lease is kind of a hassle. Basically, it's buying the vehicle again, but without the new car smell.

Good luck, you're going to love the 4Runner when you get it! :thumb:

 

[Dre's runner]

So Msrp. On a new trail 4Runner is 36015 according to kbb. If your lease payments are say? 350/ month for 36 months that comes out to 12600$ that you've given Toyota plus the whatever the down payment was (that x number of dollars due at signing) say a thousand bucks. So there's still 23400 left to pay for off the original 36000. But if you want to buy it at the end of the lease. But Toyota will charge you whatever the depreciated cost is. Which a 3 year old 4Runner that's within the allowable mileage is 33000 and change. Then on top of that the financing will be more because it's used not new. Now if you just financed the whole thing brand new at about 2% for 7 years your payments will be higher about 450 but at the end of 3 years you will owe 21,000 and change so if you want a new one you can sell yours for 31,000 and have 10 grand equity to put down. Leasing never ever never makes sense.

 

[SilverRiver]

So Msrp. On a new trail 4Runner is 36015 according to kbb. If your lease payments are say? 350/ month for 36 months that comes out to 12600$ that you've given Toyota plus the whatever the down payment was (that x number of dollars due at signing) say a thousand bucks. So there's still 23400 left to pay for off the original 36000. But if you want to buy it at the end of the lease. But Toyota will charge you whatever the depreciated cost is. Which a 3 year old 4Runner that's within the allowable mileage is 33000 and change. Then on top of that the financing will be more because it's used not new. Now if you just financed the whole thing brand new at about 2% for 7 years your payments will be higher about 450 but at the end of 3 years you will owe 21,000 and change so if you want a new one you can sell yours for 31,000 and have 10 grand equity to put down. Leasing never ever never makes sense.

I think Dre's math and analysis is pretty sound. If you lease, you will basically be $10K in the hole compared to buying.

 

[Blue Seat Lyfe]

Dont pay all cash if the dealer or your credit union / bank is offering financing at 2% or less. I always recommend showing up at the dealer with preapproved financing in hand and never go through the dealer's finance department unless you're getting the 0% for 36/48months deal that Southeast Toyota runs frequently.
0% is free money and you should take it. Paying straight cash is pretty dumb if you have good credit.

Time Value of Money there does not work out, youre better off with that monthly payment since you could invest that 30,000 in the stock market index fund for greater than a 2% return very easily, more likely a 7% return.

 

[king noob]

Yes cash for everything, including houses and properties. .

unless you -

a) live in kandahar
b) make very, very good money (250K-300K+/per year)
c) both

that is completely unrealistic.

almost nobody can come up with 300K-400K in cash (about the average price for a house here in denver). and even if they could, it might not be the best investment...that cash might be better kept elsewhere.

as for the question at hand. i would never lease. i want to own the vehicle and be able to make any choice i want about modifications, mileage, etc. and i want to own it outright at some point. you'll always, always have the payment if you're leasing.

 

[pplmvr33]

I think Dre's math and analysis is pretty sound. If you lease, you will basically be $10K in the hole compared to buying.

Not 100% sure on that math. The residual value of a 2015 TEP on a 3yr lease is just around 24k. You could buy it and turn around and sell it for a heck of lot more that that residual. Where is the $33k number coming from?

 

[1engineer]

Why must you drive the nicest, newest, shiniest thing? Id drive a POS beater I paid cash for before Id ever go get a car loan. When you finance something the bank owns it not you.

Yes cash for everything, including houses and properties. If I must get a loan it would need to be small and paid back in a short time period, and I'd have to put over 60% as a down payment. The reason everyone isnt doing it is because its hard and takes work, planning and sacrifice and they all want immediate satisfaction with buying it now, not waiting and saving. I dont want to be a slave to a bank.

Someone said something about taking money out of a high yield account??? Im not even going to respond because the thought alone is ridiculous.

You probably need to go back and take Accounting 101 again as you must have slept through it the first time. .

 

[M1911]

This is somewhat embarrassing, but for the past 9 years (through college and a few years after) I've been driving a passed down old 1992 volvo 940 while building up my income and career. She's treated me well, and now I'm ready to make my very FIRST car purchase. That purchase will be a black 2014-2015 4runner trail edition with KDSS.

This means I'm somewhat of a newb when it comes to buying cars.

Now I understand these vehicles maintain their value very well.

I'm interested in total cost as being the #1 deciding factor on if I should lease or buy.

If the price of leasing a vehicle for three years and purchasing it after far exceeds the price if simply financing the vehicle for whatever number of months you choose, than buying is a better option.

if the difference is only a few to several hundred dollars, but allows me to spread the payments across seven years to reduce overall payment amount, this for me makes more sense.

Why are people so against leasing THIS particular vehicle?

Because:

1) It costs more. At a minimum, you have two sets of financing fees.

2) It reduces flexibility. If, two years into the lease, your needs change -- like you lost your job and are now broke, or you need a bigger vehicle, or you need a more fuel efficient vehicle -- it is very hard to get out of your lease. If you purchased the vehicle instead of leased it, you can simply sell it.

3) Mileage charges. If you drive more miles than allowed under your lease it will cost you a fortune.

4) Dents and ding charges. If you turn in the vehicle with dents, dings, and scrapes, depending upon the lease agreement you can get charged large amounts.

Leasing is almost always more expensive than buying. If your intention is to keep the vehicle more than a few years, then buy it.

 

[M1911]

Time Value of Money there does not work out, youre better off with that monthly payment since you could invest that 30,000 in the stock market index fund for greater than a 2% return very easily, more likely a 7% return.

You could also lose that money. There is no guarantee that the stock market will go up over the short term.